Clement undercuts defence of usage-based billing

Industry Minister Tony Clement has dismissed a key argument big carriers and the federal regulator use to justify imposing usage-based billing on independent Internet service providers.

Speaking this week to members of the House of Commons Industry committee looking into the UBB controversy, Clement (pictured) shrugged at what he called “scary” claims that if ISPs are able to offer unlimited data plans their subscribers will swamp the carriers they buy connectivity from.

Carriers like BCE Inc.’s Bell Canada have dropped unlimited plans in favour of capped plans to keep a handle on growing network traffic. If it couldn’t force ISP customers to adopt its UBB schedule, Bell told the Canadian Radio-television and Telecommunications Commission (CRTC) last year, the minority of Internet users who are heavy users will slow down the network for others. Bell repeated that before the Industry committee last month.

“I’ve seen no evidence of that,” Clement countered Tuesday to the Industry committee, “no evidence that six per cent (of heavy Internet users) drive the 94 per cent dog. There’s no evidence that there is congestion as a result of any of that, and there’s no evidence that the pricing structure of UBB in the retail market is the solution if congestion did exist.”
Background: The fight over UBB

Under usage-based billing, Internet subscribers can go over their data caps, but they have to pay extra. The goal, Bell has said, is to prevent some subscribers from overwhelming the network by carelessly downloading video files, particularly during peak evening hours.

But Clement noted UBB plans aren’t linked to the time of day. “No one’s saying there’s congestion at 3 a.m.,” he told the politicians, “There’s no correlation on the retail side to fix that problem, if there’s a problem … That’s where I get my dander up.”

The commission doesn’t set the retail rate consumers pay for Internet access, but it does control the wholesale rates incumbent carriers are allowed to charge ISPs for connectivity. ISPs say that if UBB goes ahead, they’ll be forced to drop their unlimited plans and in effect have identical rates as the carriers and end competition.

The CRTC gave Bell the green light to start changing its dealings with ISPs who buy wholesale connectivity as of Mar. 1, but backed off in February after Clement – facing public pressure — promised the cabinet wouldn’t stand for it, which he repeated to the parliamentary committee.

Instead the commission said that it has decided on its own to review the decision. It is now collecting written comments on whether that review should be conducted internally or it should hold new public hearings. Comments are due by Mar. 28, with rebuttals due by April 29.

Clement’s comments only amplify the problems for Bell, which would probably like to persuade the commission to stick to its original decision.

However, again Clement repeated to the committee what he has said elsewhere: “If you want choice and competition you can’t force down the throats of the independent ISPs a business model that means they can’t compete.”

As for using UBB as an Internet traffic management tool, Clement noted the CRTC’s traffic management policy (also called an Internet neutrality or ‘net neutrality’) specifies any such tool has to be transparent to a subscriber. Usage-based billing isn’t transparent, Clement said.

On Wednesday, a Bell spokesperson said the company’s only comment on Clement’s remarks is that the phone company will be participating in the CRTC review.

In making his comments, Clement not only tossed aside the arguments of big carriers, it apparently undercut one of the CRTC’s assumptions for its review — that “as a general rule, ordinary consumers served by small ISPs should not have to fund the bandwidth used by the heaviest retail Internet service consumers.”

During his testimony last month before the committee, CRTC chairman Konrad von Finckenstein said the same thing.

But to the committee Clement said he doesn’t believe there’s proof of a link between heavy and ordinary Internet users.
A CRTC spokeswoman said Wednesday the regulator doesn’t comment on matters that are before the commission.

The commission first okayed usage-based billing in 2006 for four of the country’s biggest cable Internet providers. It specified, however, the carriers had to treat ISPs who buy connectivity the same as their own customers. The 2009 decision involving Bell repeated that policy.

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